Opera starts releasing financial data at request of board

Board members at the San Diego Opera have reportedly started reviewing the intricate detail of the organization’s inner workings to see whether it is viable enough to survive through next year’s 50th anniversary or beyond.

Sources at the opera say that in response to a detailed request from a group of board members who oppose management’s proposed shutdown of the opera on June 30, management has begun to release the most up-to-date information on the organization’s balance sheet, income statement, cash flow and contracts.

But the sources -- who decline to be named -- say that the board members were not getting all the information they had asked for on a list that included such items as employment agreements and performance reviews of the opera’s managers, as well as any communications that the management team had with lawyers before a surprise board meeting held on March 19 calling for a shutdown.

Previously, opera CEO Ian Campbell and board President Karen Cohn had implied that the board had long known that the opera was at risk of shutting down.

“The board should be fully aware of our financial situation at present,” Cohn said in a news release. “This has been an ongoing discussion since 2007.”

On a KPBS talk show, Campbell said the dissolution should have been no surprise. “It’s important to point out that we know this problem was coming about three years ago …,” he said. “The income gap (between revenue and expenses) is too wide.”

Both Cohn and Campbell have since refrained from talking to the media. But board members and workers say those recent statements contradict rosier pronouncements the two made during the months leading up to the meeting.

Sources say that as recently as March 3 -- just two weeks before the special meeting in which Campbell called for a near-immediate shutdown of the opera -- he was assuring the board that preparations for the 50th anniversary were on track and outlining which singers he intended to use.

An open letter from Cohn in opera programs distributed at last month’s performances continued to invite people to come to the anniversary celebration. “I can’t wait to see you in 2015!” the letter read.

The opera’s most recent financial statements -- given to board members in January and covering the fiscal year that ended June 30, 2013 -- clearly show that the opera is still ailing from the aftereffects of the Great Recession, when ticket subscriptions and charitable contributions to the opera fell sharply.

But the figures also paint a much less dire picture than Campbell’s recent statements, showing that in many areas the opera last year was climbing out of recent lows.

Despite Campbell’s complaint that contributions have been drying up, new donations nearly doubled in the last fiscal year, rising from $1.8 million in fiscal 2012 to $3.1 million in fiscal 2013.

The same was true of “restricted” contributions, timed to be released during specific future dates. As of last June, the opera had $3.6 million in such contributions timed for release between June 30, 2014, and June 30, 2018 -- twice as much as the $1.8 million in deferred contributions in fiscal 2012, covering donations through fiscal 2017.

Sales to the regular opera season have been on the decline since 2008, which Campbell has often pointed to as a sign of the opera’s growing weakness. But over the past three years, the opera has bolstered its sales through special events, ranging from a one-night-only concert by opera superstar Renee Fleming in 2012 to a performance of Verdi’s “Requiem” last month, featuring opera stars from as far away as Poland, Austria and Italy.

When those special events are added to ticket sales, the company’s revenues last year totaled $5.5 million, representing a 0.7 decrease from 2010 instead of the 8.2 percent decrease portrayed in a news release distributed by the opera, which did not include the special events.

The opera management team says the reason it doesn’t include the special events is that the opera wasn’t doing them before fiscal 2011, so it would be improper to compare the two.

But other opera managers say that such special events are an important way of boosting ticket sales -- and are more profitable than the operas themselves.

Even if the special events are included, the opera still faces major financial problems, with expenses outstripping revenue for at least three years in a row. But industry sources say such challenges shouldn't be insurmountable.

Some say one way of boosting ticket sales would be to expand the mix of operas to include more experimental, lighter or modern fare, such as recent operas “Anna Nicole,” about the late “Playboy” and Guess clothing model Anna Nicole Smith, which debuted in New York last year, or “Oscar,” about the trial and imprisonment of British playwright Oscar Wilde, which debuted in Santa Fe last year.

“Very few people are going to make something like ‘A Masked Ball’ their first opera experience,” said Perryn Leech, managing director of the Houston Grand Opera, who debuted an opera about the Holocaust this year. “You can draw more people by offering more varied products at a wider range.”

But Campbell, who has guided the opera for 30 years, has consistently declined to move to more modern fare. The current schedule focuses on such traditional classics as “Pagliacci,” “The Elixir of Love” and “A Masked Ball,” which were all written between 1832 and 1896.

According to projections by opera management, ticket sales fell sharply this year, with projected revenue for the general season falling from $5.1 million in fiscal 2013 to $4.3 million in fiscal 2014. The sales for the "Requiem" – which was fittingly performed the day after the opera board voted to shut down -- came to $385,000, compared with special event sales of $448,000 in fiscal 2013 and $508,000 in fiscal 2014.

Despite the decline, most board members were not told about management’s plan to shut down prior to the March 19 vote. But the media was. On March 18, the opera sent out an embargoed news release announcing that the board had voted to shut the opera down and quoting both Campbell and Cohn. Because of a misunderstanding about the news release, U-T San Diego put its story about the vote online even before the board had finished voting.

The vote to shut down the opera -- with a dissolution period beginning April 14 and concluding June 30 -- was 33-1, with most of the 58 board members absent. But on March 31, the board voted 35-4 to postpone the dissolution until April 29 so it could have more time to review the financial statements.